'Star Tribune' Files Bankruptcy Re-Organization--Publisher Will Exit

By: The Star Tribune Co. says it has filed a reorganization plan in U.S. Bankruptcy court, with the goal of emerging from Chapter 11 protection this fall.

The newspaper says it filed the paperwork Thursday. Since the Star Tribune entered bankruptcy in January, it has reached agreements with six of 10 bargaining units, representing 94 percent of unionized employees.

The Star Tribune says the agreements reached cost savings the company needs: cutting labor costs by $20 million a year.

Publisher and chairman Chris Harte says in a statement he's confident the newspaper will emerge in better shape and ready for the "intense competition that lies ahead in a rapidly evolving news and information industry."

UPDATE: Harte says he will leave the paper eventually. His memo to staff follows.
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Bankruptcy Update: A Major Milestone

By Chris Harte, Publisher

I am pleased to report that we have reached a major milestone in our financial restructuring. Today, we have filed with the bankruptcy court our proposed Plan of Reorganization and a related document called the Disclosure Statement. The Plan sets out how our creditors? claims will be resolved and provides the roadmap for our emergence from Chapter 11 later this year.

The filing of the Plan follows months of negotiations with our first lien lenders, our second lien lenders, the unsecured creditors? committee, and other parties.

Generally speaking, the Plan provides for the first lien lenders to receive new common stock and new secured term notes for their claims. Holders of unsecured claims will receive either a small cash distribution or new common stock and warrants for stock to be issued in the future if the company achieves certain financial targets.

Previously issued equity will be cancelled and will not result in any recovery to the owners. The Plan also provides for the reorganized company to emerge from bankruptcy as a privately held enterprise.

The draft Disclosure Statement filed today includes information about the proposed Plan of Reorganization that is intended to assist eligible creditors in determining whether or not to vote to accept the Plan.

Approval of the Disclosure Statement and related voting solicitation procedures, which we will seek at a bankruptcy court hearing scheduled for July 29, 2009, will permit us to solicit creditor acceptances for the proposed Plan and seek confirmation (approval) of the proposed Plan by the court. If the Plan is confirmed by the court, we can emerge from bankruptcy.

This process will take at least a few months. If all goes according to schedule, we expect to have our confirmation hearing in September and to emerge from bankruptcy a few weeks later - sometime in autumn 2009.

In other words, the end is in sight. Meanwhile, we continue to make good progress in positioning the company for future success. Our agreements with the Fleet, Mailers, Pressmen, Platemakers, Typographers and Guild are major achievements. We hope to reach similar agreements with the remaining unions shortly.

As I have written previously, we are fully confident that the Star Tribune Company will emerge from bankruptcy in vastly better shape than when it entered, much more ready for the intense competition in a rapidly evolving news and information industry. We will continue to provide our readers an outstanding news and information package, and our advertisers with customers they want to reach, and we will do it in print, online, on mobile devices, and in other new media as they develop.

Thank you for all your hard work, dedication and sacrifice during these many months of uncertainty, hardship and belt tightening. Your continued commitment to serving our customers, advertisers and community are the key to our success. Thank you for all you do every day.